NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Trade Adjustment Assistance and Pareto Gains From Trade

Robert C. Feenstra, Tracy R. Lewis

NBER Working Paper No. 3845
Issued in September 1991
NBER Program(s):   ITI   IFM

In a model where all factors of production are imperfectly mobile, we argue that the Dixit-Norman scheme of commodity taxes may not lead to strict Pareto gains from trade. Rather, this scheme must be augmented by policies which give factors an incentive to move: hence, the role for trade adjustment assistance (TAA). We demonstrate that by knowledge of the distribution of adjustment costs across individuals, the government can offer a single TAA subsidy to all individuals willing to move between industries, and maintain a non-negative budget. The TAA subsidy, combined with the Dixit-Norman pattern of commodity taxes, can lead to Pareto gains from trade under the conditions we identify.

download in pdf format
   (246 K)

download in djvu format
   (196 K)

email paper

This paper is available as PDF (246 K) or DjVu (196 K) (Download viewer) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Published: Journal of International Economics, vo. 36, no. 3/4, May 1994, pp. 201

Users who downloaded this paper also downloaded these:
Brander and Spencer w3071 Trade Adjustment Assistance: Welfare and Incentive Effects of Payments to Displaced Workers
Fung and Staiger w4847 Trade Liberalization and Trade Adjustment Assistance
Diamond Protection, Trade Adjustment Assistance, and Income Distribution
Richardson Trade Adjustment Assistance under the United States Trade Act of 1974: An Analytical Examination and Worker Survey
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us